Executive Summary

Why do commercial art galleries have to be more innovative? As a matter of fact, the market environment across industries is continually changing. Against the background of progressive globalisation and digitalisation, many organisations find themselves in a more complex and competitive situation than ever before. As the art market is not excluded from those changes, the primary purpose of this study is to offer innovative answers to the current challenges that commercial art galleries have today. The problem that this thesis addresses is therefore the urgent need of commercial art galleries to innovatively adapt their business to the current developments and requirements of the art market, so that they can ensure a competitive advantage over other players of the industry. The thesis at hand is limited to commercial art galleries, which are defined as business enterprises that have to generate at least enough profit to cover their expenses.

The underlying structure of this thesis is the Lucerne Design Management Process, which is divided into four iterative phases: Discover, Define, Develop and Deliver. In order to validate the aforementioned problem, the art market, the specific role of commercial art galleries and the innovation within the art market have been examined during the Discover phase of this thesis. Additionally, primary research was conducted by interviewing an emerging artist, two art galleries as well as one art market expert. During the Define phase the gathered data was analysed and synthesized into observations and insights, which pinpointed and validated the current challenges of commercial art galleries. Based on these insights, the solution requirements were defined, which steered the concept ideation phase (Develop). Finally, the selected concepts have ben refined during the Deliver phase, which marks the last stage of the design process.

The first two phases have revealed that the art market is a very closed system that consists of a few key players, which dominate the market. While commercial art galleries are the most important instance on the primary art market and constitute the gatekeeper for emerging artists, auction houses dictate the resale of artworks on the secondary market. The identified key challenges for commercial art galleries are the increased competition and low profit margins on the primary market, the dominance of auction houses on the secondary market and the future role of the gallery facilities, which are not a point of sale anymore. A general driver of change is the on-going internationalisation and digitalisation of the art market, which results in an increasing market complexity and demands a greater professionalism of the commercial art galleries. It was concluded that middle-sized commercial galleries are most affected by those changes; consequently the solution phase was focused on those galleries as the target user.

The last two phases aimed at creating a solution that enables the owners of middle-sized galleries to find individual answers that solve their current challenges. Those challenges were condensed into four critical innovation areas: gallery brand, gallery purchase and communication channels and gallery network. Based on iterative concept development within all of the four innovation focal points, the Art Gallery Innovation Compass is proposed: A digital tool that assists the owners of middle-sized art galleries to develop innovation strategies within the aforementioned innovation areas. The gallerist utilises the tool by defining his Innovation Vision, which is the business-driven future goal of the gallery, and his Gallery Innovation Personality, which is a brand model that consists of the personal brand of the owner as well as specific gallery attributes. Based on the data from those two sections, the compass will suggest customised inno- vation strategies for the purchase, communication and network options of his gallery. However, the gallerist still has to choose and combine the output by himself, resulting in a creative stimulus, a customised selection of innovation strategies that are aligned with his overall gallery objectives and actionable implications that illustrate the operational implementation.

Photo by Oriol Tarridas for Artsy.

The Thesis “Business innovation in the art market. A proposal for commercial art galleries to gain competitive advantage.” aimed to scrutinize the way commercial art galleries operate today and to offer a proposal on how innovate their business. The outcome was a digital innovation tool that allows any art gallerist to develop customised innovation strategies within the four identified crucial innovation areas: gallery brand, gallery purchase and communication channels and gallery network.